Elijah has a utility function U(c1, c2) = min{c1, c2}, where cl and c2 are his consumption in periods 1 and 2 respectively. Elijah earns £190 in period 1 and he will earn £70 in period 2. Elijah can borrow or lend at an interest rate of 5%. There is no inflation. Select one: O a. Elijah will save about £58.53. O b. Elijah will save about £61.46. O c. None of the above. O d. Elijah will neither borrow nor lend. O e. Elijah will borrow about £58.53.

Elijah has a utility function U(c1, c2) = min{c1, c2}, where cl and c2 are his consumption in periods 1 and 2 respectively. Elijah earns £190 in period 1 and he will earn £70 in period 2. Elijah can borrow or lend at an interest rate of 5%. There is no inflation. Select one: O a. Elijah will save about £58.53. O b. Elijah will save about £61.46. O c. None of the above. O d. Elijah will neither borrow nor lend. O e. Elijah will borrow about £58.53.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Cindy takes a summer job and earns an after-tax income of $5,000. Her living expenses during the summer were $1,000. What was Cindy's saving during the summer and the change, if any, in her wealth? >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. Cindy's saving during the summer is $
Suppose as a hypothetical scenario that you deposit $400 today into a savings account with a variable interest rate and will collect a payment in one year. True or False: If over the course of the year the interest rate falls, this increases the future value of your investment. True False
Question 2 Full explain this question and text typing work only thanks
Using the following data, calculate the equilibrium interest rate Y=7,000G=4000T=2,000C=150+0.75(Y-T)I=1,000-50rPublic Savings = -2000Private savings = 1100National Savings = -900
Scenario 21-3 Scott knows that he will ultimately face retirement. Assume that Scott will experience two periods in his life, one in which he works an earns income, and one in which he is retired and earns no income. Scott can earn $250,000 during his working period and nothing in his retirement period. He must both save and consume in his work period with an interest rate of 10 percent on savings. Refer to Scenario 21-3. If the interest rate on savings increases, a. Scott will always increase his savings in the work period. b. Scott will increase his savings in the work period if the income effect is greater than the substitution effect for him. c. Scott will decrease his savings in the work period if the income effect is greater than the substitution effect for him. Od. Scott will decrease his savings in the work period if the substitution effect is greater than the income effect for him. C
Sean owns a condo that he values at $500, 000. Sean hosts a dinner party, and invites Mo, a friend of a friend, who recently moved home to Halifax. Mo hates the apartment she just moved into. She thinks she will be a lot happier if she finds a place she can buys. Over dinner, Sean mentions he is moving to Toronto and looking to sell his condo. Mo has $1,000,000 in cash and values the condo at $600,000. The next morning, Mo understands that Colin, another friend, made an offer of $550,000. What is Sean's threat value? Question 17 options: $500,000 $1,600,000 $1,000,000 $550,000
Holly's utility function is U(c1, c2) = c/21 + 0.87d/22, where cq is her consumption in period 1 and c2 is her consumption in period 2. In period 2, her income is twice as large as her income in period 1. At what interest rate will she choose to consume the same amount in period 2 as in period 1? (Choose the closest answer.) Group of answer choices 0.30 0.08 0.23 0.15
John has the following utility function U(C₁, C2) = min{c₁ + ac2, C2}, where C₁ and c₂ are his consumption in periods 1 and 2, respectively and a is some positive constant. Suppose John has $100 income in period 1 and $105 income in period 2. Prices in both periods are $1. Question 2 Part al Suppose a = 2. If John can freely borrow and lend at 5% interest rate what would be his optimal consumption in both periods? 1 Question 2 Part a2 Suppose a = 2. Now, John can lend at 5% interest rate, but can't borrow at all. What would be his optimal consumption in both periods? Question 2 Part bl Suppose a 0.5. If John can freely borrow and lend at 5% interest rate what would be his optimal consumption in both periods? Question 2 Part b2 Suppose a 0.5. Now, John can lend at 5% interest rate, but can't borrow. What would be his optimal consumption in both periods?
The general case of interest rate is simple interest rate. Select one: True False
The interest rate compounded on any pay period is called the nominal interest rate Select one: O True False
QUESTION 7 As a recently hired analyst, you are tasked with evaluating your firm's bond portfolo, The first bond you evaluate has a constant payment of $427 per year and the prospectus claims the present value of the bond is $5,008. What is the Interest rate of the bond in question? Submit your answer in percent to the first decimal place, that is, 2.57% = 2.6 or 2.6%
Kevin's reference dependent utility over money is y and effort is E, refer to the: instantaneous utility function: rt: reference point for wealth, which demonstrated his recent wealth Kevin does not have from money but from gains and losses of money instead. There is no discounting, and assume that Kevin's current wealth from his job is 0. Kevin is thinking about a new role at work which allows him to increase his income by $1000 per period for two periods, counting from the current period, which is t = 0. He must undergo a training which require an effort of EO = 3500 at that value of alpha, how much ultility would Kevin lose relative to his non-projection-biased preferences if she took the position 1000 250 500 750